On Tuesday, local equities experienced a downturn as market observers evaluated the uncertainties surrounding Germany's fiscal stimulus package, particularly after the Greens voiced their opposition to the draft law designed for the plan's implementation. The blue-chip DAX index closed down 1.29%, reflecting the hesitance in the market.
ING noted that developments over the past 24 hours have increased concerns that the CDU/CSU and SPD may not secure the crucial 2/3 majority needed for their draft law to successfully implement this fiscal stimulus package. This suggests that we should anticipate very intensive negotiations behind the scenes in the following days. In the United States, sentiments were further dampened when Donald Trump announced plans to double tariffs on Canadian steel and aluminum imports in response to Ontario's initiative to levy a surcharge on US-bound electricity from Canada.
Such trade tensions add another layer of complexity to the market’s current landscape. Turning to corporate news, Henkel ($HEN) reported an increase in both attributable profit and sales for 2024, alongside the announcement of a new share buyback program worth 1 billion euros. However, for 2025, the consumer goods group has indicated a 'slower start' with an organic sales growth target between 1.5% and 3.5%.
Analysts at RBC Capital Markets pointed out that Henkel's softer growth momentum in Q4 and cautious guidance reflect a challenging environment for consumers, particularly in North America. The company’s stock was the worst performer on the index, closing down 10.36%. Conversely, Volkswagen ($VOW) faced a 1.09% decline in its stock after reporting a modest increase in its 2024 group sales, aided by its financial services segment.
The automaker has set an ambitious target of achieving up to 5% annual growth in sales revenue. However, Volkswagen has acknowledged that its operational challenges will be exacerbated by a politically uncertain environment, escalating trade restrictions, geopolitical tensions, intensifying competition, volatile commodity and exchange rates, and stricter emissions regulations..